This week’s move by a group of Jewish settlers into a disputed quarter of eastern Jerusalem provided a fitting conclusion for U.S. Secretary of State Madeleine Albright’s frustrating first trip to the Middle East.

Despite the Israeli government’s condemnation of the move, the settlers’ actions — and the violent Palestinian reaction to the takeover — hearkened back to the sharp divisions between Israelis and Palestinians that had preceded Albright’s visit.

The incident at Ras al-Amud, if allowed to continue, seemed certain to further exacerbate tensions that were already running high in the wake of Albright’s visit.

Each side found some satisfaction in Albright’s public pronouncements – – demanding both tough action by Palestinian Authority Chairman Yasser Arafat against terror and a suspension by Israeli Premier Benjamin Netanyahu of “unilateral” actions such as settlement expansion.

But both Israeli and Palestinian officials emerged from their separate meetings with Albright profoundly disturbed.

The Palestinians fear that Albright’s tough talk aside, Washington will not, at the end of the day, court confrontation with Israel or its friends in the U.S. political community.

Despite a broad spectrum of American Jewish views on the Israeli-Palestinian peace process, Arafat believes that the Clinton administration will shy away from a bruising fight with Netanyahu.

Palestinian officials are keenly aware of a letter that U.S. congressional leaders sent to Albright on the eve of her visit in which they focused solely on the terrorism/security question and threatened a cutoff of U.S. aid and recognition for the Palestinian Authority.

To the Palestinians, this was firm evidence of Netanyahu’s strong standing on Capitol Hill.

For their part, however, Israeli government officials were taken aback by the strident tenor of Albright’s public demands that Netanyahu suspend unilateral actions which, she pointedly remarked, the Palestinians regard as provocative.

Moreover, Albright’s blunt statement that she would not return to the Middle East unless the two sides displayed a readiness to make hard decisions appeared to confirm a long-evolving assessment among Israeli officials that President Clinton is not anxious to embroil the second term of his presidency in Middle East peacemaking.

“I’m not going to come back here to tread water,” she said before concluding the Israel leg of her trip.

On the face of it, this should suit Netanyahu’s conservative government, which is far apart from Washington on the peace process.

But Netanyahu, who served at the Israeli Embassy in Washington during the 1980s, knows that a shift in priorities by the Clinton administration could translate into less international support — and even less aid — for Israel.

The one opening Albright provided was to arrange for more separate meetings in the coming weeks with Israeli and Palestinian officials in Washington and New York.

But given the tenseness of Israeli-Palestinian relations, hardly anyone is putting much faith in those meetings.

For now, the Ras al-Amud affair is clearly on many minds. Several settler families moved into the predominantly Arab neighborhood on Sunday night after a district planning board upheld a July decision by the Jerusalem municipality to grant Miami-based developer Irving Moskowitz permits to build 70 housing units for Jews.

The action took place only days after Albright called on Israel to take a “timeout” from taking “provocative” steps, particularly Israeli construction plans on disputed land.

When Israel began groundbreaking in March for a new Jewish neighborhood at Har Homa in southeastern Jerusalem, the Palestinians suspended negotiations with Israel.

The Ras al-Amud move has the potential to be even more explosive. In contrast to Har Homa, which is located in a relatively isolated area, Ras al-Amud is a densely populated Arab section of Jerusalem.

Indeed, Defense Minister Yitzhak Mordechai and other government moderates warned that the action could trigger violence throughout the West Bank and the Gaza Strip, a warning loudly voiced by leading members of the Palestinian leadership and by members of the Israeli opposition.

Jerusalem police officials said the settlers’ title deeds were in order, but Attorney General Elyakim Rubinstein said the government had the legal right to evict them to protect public order.

As he did in July, Prime Minister Benjamin Netanyahu maintained this week that he opposes building at Ras al-Amud at this time.

“We believe that what is happening right now in Ras al-Amud is not good for Jerusalem; it’s not good for the State of Israel.

“Actions and building in Jerusalem must be done in accordance with a government master plan,” Netanyahu added, and not “maneuvered by individuals.”

But he stopped short of saying the settlers would be evicted, noting that “the property rights” of Israelis had to be respected.

Prior to the Ras al-Amud development, it appeared that there was some minor progress in the aftermath of Albright’s visit.

Netanyahu spokesman David Bar-Illan said Sunday that there were some “positive” signs that the Palestinians were beginning to fight the terrorist infrastructure.

Within hours after he spoke, an Israeli army spokeswoman said Israel would lift an internal closure on Palestinian towns in the West Bank. Israel imposed the closure after a Sept. 4 triple suicide bombing in Jerusalem that killed five Israelis.

Also Sunday, the Foreign Ministry announced that Israel would hand over to the Palestinian Authority half of the tax revenues it was withholding after the July 30 double suicide bombing in Jerusalem.

But for all these steps, few believed that the two sides were actually ready to return to the negotiating table.

Albright herself said Monday that she could not predict when Israeli- Palestinian negotiations would resume.

“I am an optimist, but I cannot make any predictions of success based on my discussions this week,” Albright said in Beirut, as she concluded her trip that also included stops in Syria, Egypt, Saudi Arabia and Jordan.

“I believe that I have accomplished some small steps where big steps were needed, but that is better than no steps.”

Given this bleak prognosis, some Israelis were hopeful following an Associated Press report that there may be some movement on the Israeli-Syrian track.

Despite harsh rhetoric from Damascus in the wake of Albright’s visit there Saturday, the report indicated that she had succeeded in organizing Israeli- Syrian meetings — although they were only likely to be “talks-about-talks” – – to take place in the United States in the coming weeks.

Neither side seemed anxious to confirm the report, much less to greet it as anything of a breakthrough.

Nevertheless, veteran observers here believe there may be more mileage for U.S. diplomats on the Syrian track at this time than on the Palestinian.